MOSCOW (MRC) -- Reliance Industries Ltd
has completed spin-off of the firm�s oil-to-chemical business into a new unit
that will help it pursue growth opportunities with strategic partnerships,
reported Kemicalinfo with reference to the
company"s statement.
The oil-to-chemical (O2C) business unit holds
Reliance�s oil refinery and petrochemical assets and retail fuel business but
not upstream oil and gas producing fields such as KG-D6 and textiles
business.
�Reorganising refining and petrochemicals as oil-to-chemicals
(O2C) reflects new strategy as well as management matrix,� the company said in a
post earning investor presentation.
Reliance started work on hiving off
the O2C business into a separate unit last year for a possible stake sale to
companies such as Saudi Aramco.
It values the O2C business at USD75
billion and has been in talks with Saudi Arabian Oil Co (Aramco) for sale of a
20% interest.
The company, however, did not mention discussions with
Aramco, which are said to have hit a valuation roadblock. The
reorganisation would �drive the move towards further downstream and closer to
customers� and �provide sustainable and affordable energy and materials
solutions to meet India�s growing needs,� the firm said in the
presentation.
Reliance O2C Limited houses oil refining and petrochemical
plants and manufacturing assets, bulk and wholesale fuel marketing, and
Reliance�s 51% interest in retail fuel joint venture with BP of the
UK.
The O2C unit also houses the firm�s Singapore and the UK-based oil
trading subsidiaries and marketing subsidiary, Reliance Industries Uruguay
Petroquimica SA. It also houses Reliance Ethane Pipeline Limited
that operates a pipeline between Dahej in Gujarat and Nagothane in Maharashtra
as well as 74.9% stake that Reliance holds in the joint venture with
Sibur.
Its very large ethane carriers, gas pipelines such as one that
transports coal-bed methane from its CBM blocks, overseas oil and gas asset
holding company Reliance Industries (Middle East) DMCC, and domestic exploration
and production assets would not form part of the O2C unit.
Ambani had in
July 2019 stated that the process of spinning of O2C into a separate subsidiary
would be completed by early 2021. Reliance owns and operates twin
oil refineries at Jamnagar in Gujarat, with a combined capacity of 68.2 million
tonnes per annum.
The company holds a 66.6% stake in the KG-D6 block
where it is investing about USD5 billion in developing a second set of gas
discoveries along with BP. It also has a similar stake in the NEC-25 block in
the Bay of Bengal and operates two CBM blocks in Madhya Pradesh. These upstream
assets are not part of the O2C unit.
�Reliance O2C (is) one of the most
integrated manufacturers of value-added fuels, chemicals and materials,� the
presentation said. �O2C to maximize downstream, reduce transportation fuels and
create clean and green energy platforms.
Reliance for the first time
reported integrated earnings of the O2C business in its third quarter financial
results. Previously, refining and petrochemical businesses were reported
separately while fuel retailing revenue was part of the firm�s overall retail
business.
In the October-December 2020 earnings statement, refining and
petrochemical as well as fuel retailing businesses earnings were reported as
one. As a result, it did not give refining margins � the most sought after
number to assess the firm�s oil refining business.
The company�s EBIDTA
grew 10.35% to Rs 9,756 crores (USD1.33 billion) for the period ended December
31, 2020 as against EBIDTA of Rs 8,841 crores (USD1.2 billion) for the previous
quarter.
Net sales saw an increase of 10.05% to Rs 83,838 crores
(USD11.49 biilion) for the period ended December 31, 2020 as against net sales
of Rs 76,184 crores (USD10.44 biilion) during the previous
quarter.
As MRC informed earlier,
in September 2020, RIL released a detailed plan to carve out its
oil-to-chemicals business into a separate entity for a potential stake sale. As
per the scheme, RIL�s O2C assets, including its refining, petrochemicals,
fuel retail (majority interest only) and bulk wholesale marketing businesses,
along with its assets and liabilities, will be transferred to a new unit. The
new unit will include the refining and petrochemical plants and manufacturing
assets at RIL�s Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga,
Silvassa, Barabanki and Hosiarpur locations.
It will also include all
assets relating to RIL�s ongoing refinery and petrochemical projects that are
being commissioned or near completion, the company said. RIL had officially
announced its proposal to transfer its oil-to-chemicals (O2C) business to a
separate entity in April.
Ethylene and propylene are feedstocks for
producing polyethylene (PE) and polypropylene (PP).
According to MRC"s DataScope report,
PE imports to Russia decreased in January-November 2020 by 17% year on year and
reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the
greatest reduction in imports. At the same time, PP imports into Russia
increased by 21% year on year to about 202,000 tonnes in the first eleven months
of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase
in imports.
Reliance Industries is one of the world"s largest producers
of polymers. Thus, the company produces among others polypropylene, polyethylene
and polyvinyl chloride. |